Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

Copper: Possible Deflation Call and Warning for Stocks

admin by admin
September 30, 2011
in Uncategorized
0
0
SHARES
32
VIEWS
Share on FacebookShare on Twitter

by Albertarocks

We’ve all heard the cliché about Dr. Copper. It’s so cliché by now that I’d be embarrassed to even repeat it. But that cute saying has more to do with the fact that the price of copper is a relatively good gauge indicating the health of the economy, than offering a true reflection of the health of the equities markets. After all, the action in the stock markets has become so disconnected from the real economy (in essence, from ‘reality’) that I sometimes wonder whether the stock markets are even going to be in existence a decade from now. Nonetheless, what I’d like to demonstrate here is that copper, as a truly good representative of industrial materials (commodities), also relates to the stock markets in such a way that it can provide us with very sound signals about the future direction for equities. At this time, it appears to be issuing a very stern warning, a warning that in the past has been very accurate and dependable… to get the hell out of equities.

 

In the past, we have seen charts showing the S&P 500 when it is priced in terms of various other vehicles… gold for example. Those studies are very interesting and offer ‘some’ guidance about whether or not investors are really getting ahead after inflation is taken into account. The unfortunate problem with that particular gold analysis is that the price of gold had for years been clandestinely, and later proven to be, manipulated. Clearly, it still is.  Gold had been held down by those who wish to hide the fact that the only real money “is” gold, and that the illusion of a soaring stock market is just that… an illusion based on ever increasing liquidity that continuously and severely destroys the value of fiat dollars. No folks, when the equities markets are soaring, you are not getting your money’s worth.  But the global banking oligarchy doesn’t want you to know that.  So the sad truth is that any analysis that uses gold as one of the component comparators is flawed, thanks to the likes of JPM.

In an effort to provide a better, and far more accurate, picture of the real effects of inflation, I presented a study back in April of 2011 which showed the S&P 500 as priced in oil. Needless to say it offered a much clearer picture of the real value of the S&P and was indeed very revealing. Disgustingly so, because that study exposed the fact that while equities had indeed risen in nominal terms since 1999, the price of oil had actually increased at 870% the pace. For anyone who might be interested in reviewing that particular analysis, it can be found by clicking here. But before you do that, I beg your kind understanding that this article was written at the beginning go my little foray into the world of publishing articles (at the behest of several of my friends at Seeking Alpha). I was a neophyte.  I hadn’t yet thought of better ways to display charts so that they weren’t quite so ‘busy’.  I didn’t consider myself to be an particularly good writer back then and as far as I’m concerned I still isn’t.

So far, we have discussed two different comparative studies: a) the S&P as priced in real (but grossly manipulated) money, namely gold…. and b) the S&P as priced in ‘fuel’ that a healthy economy requires… oil. There was a third, one which I address in the footnote and which is relating the S&P to the $CRX. But what we’re going to investigate here is a 4th way of pricing the S&P 500…  as priced in one of the most commonly used ‘materials’ consumed in a healthy and growing ‘industrial’ economy… and of course we’re talking about copper.


The chart below is a weekly scale that looks at the S&P 500 as priced in copper, going back to mid 2006:


Click here for a live and updated chart

In general, when the candles on the ratio are falling, the S&P 500 is underperforming copper. Or more importantly, when the candles are falling, copper is rising relative to equities. At times when copper is in high demand (when the candles on this chart are falling) we can be pretty certain that two phenomena are in vogue… a) the global economy is strong enough to be creating demand for copper and therefore driving its price up faster than the gains in a raging equities bull market, and b) commodities prices in general are rising right along with copper. They always do. It shows that inflation in ‘real goods’ is indeed occurring at a faster rate than in what otherwise appears to be a soaring equities market. And of course, the inverse is true: when the candles on the ratio are rising, the S&P 500 is outperforming copper. Or, from the opposite and far more ominous perspective, when the candles are rising copper is falling relative to equities. There is pretty much only one reason for copper prices to suddenly reverse and start falling at a faster rate than equities are. And as has occurred so regularly in the past… this recent reversal in that trend was indeed “sudden”.

As can be seen on the chart, peaks in this ratio very often take the form of ‘island tops’. Of critical importance is to recognize whether these island tops occur after a sustained uptrend in the ratio, or after a sustained downtrend. In other words, is it an exhaustion gap? Or does it represent a breakaway gap? Please take note of the candle on the chart denoted by “KEY CANDLE”. Let there be no misunderstanding here… the moving averages on this chart are indicating that this ratio is going to rise further. The odds that the latest candle on the chart is an island reversal are very slim. Having said that, the dark lords are very powerful and have a habit of making many types of analyses (and analysts) look rather foolish. Still, I’ll take my chances here. The shape of the overall pattern since the beginning of 2009 suggests we may be on the verge of a very sharp movement out of what appears to be a sustained and impressive ending diagonal. Does that aspect of this chart look familiar? It should… it is perfectly logical that this chart appears to be resolving in a pattern very similar to that of the US dollar. Folks, inflation does not appear to be in the cards at this time.  Instead, despite my distain for the FED and everything it stands for, when Mr. Bernanke speaks of not seeing deflation as being a big problem, what he really means is that he’s doing all he can to keep that deflation genie tightly corked up in that bottle.  He’s speaking the truth.  And he’s losing the battle.

What we’re seeing is a rather alarming indication that copper has most likely entered a phase of diminishing demand, a trend which is not likely to reverse to upward any time soon. That my friends is a huge ship on the global economic ocean… it takes a sea-change to reverse its course. No matter how we slice it, the phenomenon of copper suddenly underperforming equities is not only a sure sign of an economy that is not firing on all cylinders, it is also a signal that deflation in real goods (materials) is beginning to take hold… and as has been the case in the past, it’s happening ‘suddenly’. Considering the level from which we are starting this journey, there is every potential for the coming deflation to be so mind bogglingly crushing in percentage terms, that most of us can’t even envision it.  Yes, at some point we will see the phase of enormous inflation that everyone is expecting… but that era is just going to have to wait its turn.

My conclusion based on this chart and my interpretation of its signals will no doubt be criticized by a few. So be it… there is ample evidence elsewhere that strongly support the conclusions. In fact, I think maybe it’s time to rename the US dollar. I think I’ll call it Bruce… as in Bruce Almighty. From this point, I defer to the annotations on the chart since this really is a case where a picture is worth thousand words. Eeeewww… that was so cliché.


Related Articles

Investing articles by Albertarocks:

About the Author


AR Albertarocks is the pseudonym for a talented chart analyst whose work has been published at several web sites and now appears at Albertarocks’ TA Discussions. Global Economic Intersection is fortunate that Albertarocks posts some of his very unique analysis here.


Previous Post

The American Presidency: Let’s Redefine It, Now!

Next Post

Chicago Purchasing Managers Rebounded in September 2011

Related Posts

Tax Benefits For Bitcoin Firms In Belarus Extended Up To 2025
Economics

Tax Benefits For Bitcoin Firms In Belarus Extended Up To 2025

by John Wanguba
April 1, 2023
China Loans $240B As Bailout 'Belt And Road' Nations – Study
Economics

China Loans $240B As Bailout ‘Belt And Road’ Nations – Study

by John Wanguba
April 1, 2023
Will Ripple And SEC Settle?
Econ Intersect News

Will Ripple And SEC Settle?

by John Wanguba
April 1, 2023
Is The Biden Administration Politicizing Crypto?
Business

Is The Biden Administration Politicizing Crypto?

by John Wanguba
March 31, 2023
How First Republic's Befriending Of The Wealthy Led To A Crisis
Business

How First Republic’s Befriending Of The Wealthy Led To A Crisis

by John Wanguba
March 31, 2023
Next Post

Chicago Purchasing Managers Rebounded in September 2011

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Tax Benefits For Bitcoin Firms In Belarus Extended Up To 2025
  • China Loans $240B As Bailout ‘Belt And Road’ Nations – Study
  • Will Ripple And SEC Settle?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish